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Govt admits illegally spying on Dotcom

The Government has admitted its secret communications agency has “unlawfully” spied on internet tycoon Kim Dotcom during investigations into the Megaupload case.

Prime Minister John Key says he believes the Government Communications Security Bureau (GCSB) acted unlawfully while assisting police on the case by eavesdropping without authorisation.

He has referred the Bureau to the Inspector-General, Paul Neazor, who has powers to investigate the intelligence agency’s compliance with the law.

The High Court and affected parties in the Megaupload case have also been informed.

Internet tycoon Kim Dotcom and three of his associates were arrested in January. He is facing internet piracy and money laundering charges in the United States, with extradition proceedings due to start in March.

Mr Key says it is disappointing the law has been broken.

“I expect our intelligence agencies to operate always within the law. Their operations depend on public trust,” he says. "I look forward to the inspector-general's inquiry getting to the heart of what took place and what can be done about it."

He says the bureau "acquired communications in some instances without statutory" approval. Mr Key says he was told about the GCSB's actions by the agency's director on September 17.

The GCSB is part of the global security and intelligence network known as Five Eyes or ECHELON. The five nations in the network are the United States, the United Kingdom, Australia, Canada and New Zealand.

The Bureau’s most well-known spy base is Waihopai, which was attacked by three protestors in 2008.

Mr Key says found out about the unlawful spying on Dotcom on Monday last week but waited until today to make the announcement.

Dotcom visited Parliament last Thursday to watch MPs in action. He sat in the public gallery opposite Mr Key – who would have known about the breach at the time.

Kim Dotcom: I feel like James Bond villain

Kim Dotcom responded to the announcement with a series of tweets to his 125,000 followers on website Twitter.

“The NZ equivalent of the CIA has spied on me UNLAWFULLY,” the first tweet says.

“I'm now a real life James Bond villain in a real life political copyright thriller scripted by Hollywood & the White House,” a second one reads.

“The truth will come out…This is just the beginning,” the third reads.

Dotcom added he welcomes the inquiry into unlawful acts by the GCSB, demanding to “please extend the inquiry to cover the entire Crown Law Mega case”.